Lead Generation That Works the First Time: How Henry Schuck Built a $30 Million Company Virtually Overnight

By Michael Goodwin | Yahoo Small Business

Suppose you make WidgetWare—add-on middleware that makes every Windows OS run at least five times faster. And suppose you want to sell WidgetWare licenses to lots of small- and medium-sized businesses. You've put together a terrific product presentation. Now it's time to get it into the hands of the IT people who are in charge of buying technology at lots of different companies.

So you buy a mailing list—only to discover that half your emails bounce back because the people on the mailing list don't work there any more. As for the other half, it turns out that 38 percent of them run Linux, or OS X, so you've wasted most of your mailing list money.

At the ripe age of 30, Henry Schuck is a passionate entrepreneur—and a seasoned start-up veteran. He founded his first company, Redline Promotions, when he was a college student at the University of Nevada in Las Vegas; it promoted night clubs in casinos on the Strip. After selling Redline Promotions (for a significant chunk of change), Schuck decided to enroll in law school.

"During my first year," Schuck recalls, "my business partner, Kirk Brown, now co-founder and COO of DiscoverOrg, called me and said, 'Hey, let's start another business—something around lead generation.' I was literally on my way to Oxford, where I was going to do a semester, and I said, 'OK, I'll consult,' and he said, 'Even if you just do five or ten hours a week, we can be 50-50 partners.'" Schuck was then 23.

A Ton of Thrash

It turned out to be a great deal for both of them.

Schuck and his partner could see that sales and marketing people seldom had access to good marketing leads. There were plenty of companies that offered sales and marketing information, but they were getting that information via technological shortcuts like webscraping, webcrawling, Web spiders, or crowdsourcing. "We realized that those mechanisms for gathering sales and marketing data were just not good enough," Schuck declares. "Companies would inevitably end up with bad information, sales reps would end up spinning their wheels, marketing would send emails that bounced, and there was just a ton of thrash. We thought we could eliminate a lot of that by making sure the data was as up-to-date as possible. And we knew that the only way to do that was to make phone calls to gather it."

Innovation by Dis-Innovation

Seven years later, DiscoverOrg is still "hitting the phones"—and has grown into a $30 million company, doubling in size every year without outside funding. It pays 150 employees, and services major IT clients like Google, Microsoft, Dell, Intel, VMWare and McAfee.

The "secret" behind DiscoverOrg's success is surprisingly simple: Its information is unfailingly accurate. In a way, the company has turned back the clock by implementing what Schuck calls "innovation by dis-innovation." Unlike competitors that webscrape and crowdsource their data, a team of 85 DiscoverOrg analysts is continually on the phone, calling into IT departments and asking questions to update sales intelligence.

Thanks to its old-fashioned approach, DiscoverOrg claims to have the most reliable contact data in its category. And consequently, Schuck boasts, DiscoverOrg has become a vital sales tool for technology vendors.

"We profile who's who in the IT and finance departments of the largest 17,000 companies in North America and the U.K.," he explains. "We map out the technology buyers at these companies, and provide leads so technology vendors know who to contact and how best to sell their products and services. We provide an org chart so you know how IT buyers are placed in the hierarchy. We let you know what technology they're currently using, what their technology stack looks like, what projects and initiatives the company is currently working on. Are they planning a technology upgrade? Do they have a new CIO? You get a bunch of intelligence around these accounts so you can sell them your technology more effectively."

DiscoverOrg was a hit from the beginning; the feedback Schuck and Brown got was extraordinarily positive. "It was just Kirk and me in a room, building out the product information," Schuck recalls, "but the data was constantly updated and accurate, because Kirk and I were doing it on the phone, and nothing was going into the database unless we verified it. People were saying, 'My goodness, this information is so up-to-date, so accurate, so complete, we've never seen data like this before.' As we grew, we stayed loyal to that model."

Way Blew Out

When most companies talk about start-up surprises, they mean nasty ones: the unexpected visit from the IRS or the supplier who suddenly goes bankrupt. But the only surprise during DiscoverOrg's start-up run was how fast the company was succeeding.

"We grew really fast," Schuck recalls. "That was the only surprise. It wasn't as long a haul as I'd expected to gain traction, or to build a product that clients could gain value from. All that happened very fast. In 2011, we did around $5.5 million, so our goal for 2012 was $8 million or $10 million. And that year we did $13.7 million! We way blew out what we thought was even possible—and it became clear that there was a lot of head room in this space. Those were formidable years for us."

Expanding Internationally

So what's next for DiscoverOrg?

"We've built a great group of clients around U.S. IT," says Schuck, "and we'll continue to expand within those companies, but we're going to grow internationally as well. We're building data on European companies, Latin American companies, and adjacent departments—so instead of just covering the chief information officer and the people underneath the CIO, we've begun to profile the chief marketing officer and the people underneath the CMO and the chief financial officer. We're continuing to grow adjacent groups as well as expand internationally."

Schuck is the first to admit that he had no idea the company could grow to where it is today. "We never thought it would be a 150-employee company doing $30 million in revenue,” he says. “Nobody ever expected that. But we've listened to our customers, we've seized opportunities, and we've worked incredibly hard to get to where we are. One year, we did $3 million. And the year after that, we did $6 million. But we never got to a mark where we said, 'OK, great!' We’ve just said, 'OK, what's next?'"